Fabbrica Sessions

Education to Entrepreneurs and Leaders

Financial Efficiency

Growth means managing resources (e.g. product development, inbound and outbound marketing, production) that are necessary to make business dreams happen. This path is full of pitfalls. Some can focus on sales performance and end up with no margins left. Others can focus on revenues and margins, but end up forgetting to manage client receivables, which damages the company’s liquidity. Others can get excited with the many funding options offered by banks to finance growth and over leverage the company based on optimistic assumptions. A bad financing round or M&A deal might happen whenever the leader does not understand the economics of its business and how they are compared to peers and benchmark businesses, whether offline or digital.

Considering Financial Efficiency during growth is key to develop entrepreneurs and team dreams. The founder and C level agenda must consider and develop many aspects of financial efficiency priorities:

Planning growth;

Assessing growth efficiency: fixed assets and working capital;

Assessing and prioritizing investment projects;

Planning financing and funding needs;

Planning M&A deals.

In order to change the team’s mindset into a more productive one it is essential to focus on such issues:

Aligning and fostering focus on cash flow productivity;

Making leaders accountable while growing the business (goals, budget, auditing);

Zero-Based Budget (Opex)

Rethinking the way a company plans and spends resources to achieve challenging goals. ZBB questions the purpose and the return of every expense, every process should allocate resources from ground, radically eliminating wastes, avoiding poor money management and engaging people into owner’s mentality.

Capex

As the company grows bigger and more complex, planning the company’s investments (strategic assets) for the long term requires a more sophisticated approach. Decision-making process should consider financial scenarios, impacts and alternatives, as well as more engagement of leaders.

Valuation

A growth business has to understand and manage its key value drivers in order to take better financial decisions. Wrong assumptions on its Valuation, can mislead entrepreneurs and investors into fatal investment decisions such as: infrastructure, working capital needs and stock-options plan.